PERSPECTIVE

Social CRM- A Way to Innovate Banking CRM

Banking industry has realized that to ensure the ROI expected on their CRM investments, it is necessary that their sales team recognize the value add of CRM in terms of increased sales out of that investment. Many analysts are of the view that CRM is currently seen as an administrative burden by the user. This is because of the fact that much of the CRM software is focused towards process automation and that does not necessarily provide incremental value back to the user. Sales people often see CRM as a reporting tool instead of sales generating tool and hence adoption wanes. The above argument necessitates the need of a Banking CRM application equipped with the tools which Help in generating more sales and Are less inclined towards generating reports Sales teams have always looked upon CRM as a management reporting tool, probably because a traditional CRM application asks a salesperson to enter as much information as possible and benefit the management not the salesperson by generating reports which management can review on timely basis. Also, because enterprise systems are generally considered less appealing in comparison to Web 2.0 applications currently available freely over the internet, it is believed that CRM applications with traditional User Interface (UI) are not helpful in increasing the productivity of a salesperson. Most of the social networking sites currently use Web 2.0 technology such as RSS feeds, blogs etc. Also, social networking sites are just like rich resource mines carrying huge number of data. The idea behind social CRM is to take advantage of both these characteristics of social networks i.e. a good User Interface(UI) with Web 2.0 technology and increased productivity of salesperson with proper analysis of data available through these networks. In this paper, we will discuss the following Challenges of traditional banking CRM Web 2.0 and its advantages

Need for social CRM in the banking industry Different ways in which social CRM can be designed Challenges in realizing the value of social CRM and Ways to overcome these challenges. Traditional Banking CRM Evolution of CRM in banking industry can be categorized in two phases : Phase I: Need of a place (system) where customer related information can be saved and extracted from here in raw format (as entered earlier) whenever needed. Phase II: Need of analytics based on customer information available. This analytics is supposed to be used by marketing, sales and support team in such a manner that it should result in increased campaign responses, increased opportunity closure and reduced turnaround time for service requests. Challenges with traditional banking CRM Traditionally, banking CRM required huge efforts from bank users to enter as much information of customers as possible in the system. However, rarely this information was presented to front end user of the bank (sales, support etc.) in such a manner that it increased the productivity of these users. Many solution providers in this area made efforts to write a logical code which could help in customer segmentation based upon the customers profile. Then, these companies tried to present the analytical information in such a manner that management could derive their strategies based upon this information. As it has been mentioned earlier, efforts have been made by many solution providers in this area but only few of them were able to make a business case in front of large banks. There are two major challenges with traditional banking CRM system : It was assumed that banking CRM system needs to own the data (of customers and prospects) to do analytics. Today, people may

hesitate in providing their personal data to banks call centre executive but they would like to enter the same information on social networks without even being asked to necessarily do so!!! Basically, environment is changing and with that our assumptions should also change accordingly. It might be dangerous to assume now that banking CRM is supposed to own the data Solution providers used to compete in banking sector based upon their products features such as scalability and performance. Little emphasis was given to User Interface(UI). Few years ago it was a perfect strategy for solution providers to showcase the strength of their product in terms of scalability and performance but today when banks have a large number of options to look for and especially in case of CRM application on which the primary business of banks i.e. transaction is not much dependent and which can be bought from a vendor separate from core banking system vendor, it has become important to have a kind of user experience which engages front end bank users in productive manner and they should find a value add out of CRM. Today, when bank users log-in to their LinkedIn or Orkut profile they find it interesting and engaging whereas when these bank users log-in to banks CRM application they find it uninteresting and monotonous. Again, it might be dangerous to keep user experience as a priority no.3 in the list today Web 2.0 The term "Web 2.0" describes the changing trends in the use of World Wide Web technology and Web design that aim to enhance creativity, communications, secure information sharing, collaboration and functionality of the Web. Web 2.0 concepts have led to the development and evolution of Web culture communities and hosted services, such as social-networking sites, video sharing sites, wikis and blogs. The term first became notable after the O'Reilly Media Web 2.0 conference in 2004. Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical

specifications, but rather to changes in the ways software developers and end-users utilize the Web. Advantages of Web 2.0 Web 2.0 websites allow users to do more than just retrieve information Users can own the data on a Web 2.0 site and exercise control over that data These sites may have an "architecture of participation" that encourages users to add value to the application as they use it Web 2.0 sites often feature a rich, user friendly interface based on Ajax, Open Laszlo, Flex or similar rich media In short, the characteristics of Web 2.0 are - rich user experience, user participation, dynamic content, metadata, Web standards and scalability. Further characteristics, such as openness, freedom and collective intelligence by way of user participation, can also be viewed as essential attributes of Web 2.0. Need of Social CRM in Banking As it has been mentioned earlier, it may be dangerous to assume that CRM is supposed to own the data to perform some kind of analytics which helps in customer acquisition and retention. Well, the question is then who will own the data (or already owning it!!!) if not CRM? The answer to this question is quite obvious to people who have their accounts with social networks such as LinkedIn, Orkut, and Facebook etc. Most of these social networks make use of Web 2.0 to provide a networking platform to facilitate people share their ideas, thoughts (through blogs), converse easily (threads), play quizzes and online games within particular network and lots more. They provide the account holder the facility to own and control their data. In summary, these social networks engage people and help them become social.

Business benefits for banks Banks may derive both quantitative and qualitative benefits by upgrading their CRM system with Social CRM. On the quantitative side there are benefits of cost reduction. There is a benefit of reduced capital cost by owning less capacity database. Further, there is a benefit of reduced operational cost by getting away from the maintenance of this database. On the qualitative side again there are benefits of cost reduction. Increased engagement of bank representatives and DSAs will result in increased productivity and hence reduced operational cost. Also, the way in which customer information is used by social CRM will result in to greater customer satisfaction and hence increased business for banks. Therefore, banks may improve both top line and bottom line numbers by adopting social CRM. Point to be cautious here is how the information obtained from different sources is used by the banking system. This information, if not used in correct manner may result in loss of trust in relationship between banks and their customers and hence the loss of business for banks. Conclusively, it makes sense to upgrade banking CRM with Web 2.0 capabilities and to assume that customer data may not be owned by CRM itself. Designing Social CRM From a macro level perspective Social CRM can be designed in two ways : A system which can interact with the outside world (other internet applications, mobile applications, media etc) to gain insights into customers (or prospects) information which can be used intelligently to acquire and retain customers A system which will help internal members of organization to connect to each other using some kind of social network in such a manner that increases their productivity in terms of customer acquisition and retention

We will discuss both of these options one by one. The term outside / inside used here is with respect to the bank using the banking CRM. The requirement of designing a CRM system which can interact with the outside world is derived from the following points: The assumption of CRM system owning the customer (or prospect) data may be wrong enough to lose an opportunity There are other internet (and mobile ) applications where people feed enough details about themselves (and that too in public domain!!!) which they will probably not be interested in giving to bank representatives and Direct Selling Agents (DSAs) due to several reasons like - lack of time, interest and security

Data Layer

Social Networks (Outside world)

Interface Layer

Application interfaces (Extracts useful data form Social Networks and pass it to Business Logic Layer of Banking CRM

Business Logic Layer

Business Logic for Demogra phicData

Business Logic for Psychogra phicData

Business Logic for Financial Data

Business Intelligence Matrix

Business Logic Layer Presentation Layer

Interactive Charts

Interactive Tables

Recommendations

Design#1: Interaction with the outside world

The idea is to integrate the CRM with other internet (and / or mobile) applications in such a way that CRM system can extract the data from these applications and pass it on to its analytical layer in the format which is recognized by the analytical layer. Here the analytical layer will process the data and

produce the results which will help in customer acquisition and retention. This design considers two basic assumptions : System should be capable of segregating the useful and useless data and based upon this segregation it should be able to extract the partial data (useful data) from the outside world The results produce by analytical layer should be presented in a manner that helps bank user in decision making. In other words, UI should be good enough to engage bank user in the results obtained from analytical layer Interaction within the organization The idea is to provide the sales representatives and DSAs a platform within the enterprise system just like a social network (LinkedIn, Facebook, Orkut etc.) which helps them to communicate to each other just the way they communicate on social networks i.e. threaded conversion, RSS feed, Wiki, blogs, references etc. it can be extended to support staff of bank as well. The logic behind developing such a platform is to increase the productivity of bank staff with the help of these social tools. Using such platform bank representatives can refer clients to each other, they can discuss about their experiences using blogs, feed the knowledge base in Wiki which will be used by their colleagues and by them at later point of time. Certainly, there are some challenges in achieving these objectives. Next, we will discuss these bottlenecks and the ways to overcome them. Challenges in realizing value from Social CRM Here we will discuss the challenges based upon different designs of Social CRM : Interaction within the organization Well, when we say that the idea is to provide a platform where sales people can interact with each other, we are assuming that these people

will not hesitate to share information regarding the leads they have generated or worked upon e.g. preferences of particular type of customers, general behaviour of people in a particular region etc. Now, this is a big assumption in itself because sales people by virtue of being commission centric generally consider this kind of information as a commission generating tool and probably, any competitive sales person will hesitate to share information on his lead (whether he is working on it or already worked on it). So, the first and foremost challenge in realizing the value of social CRM is change management. It means, sales team needs to be made aware of the fact that all the information they are holding may not be commission generating tool for them and may be used by other sales persons in larger interest of the organization they belong to. Also, change management is a time consuming process and every sales person may not respond in a positive manner to this process. Therefore, CRM system should be capable of extracting such minimum information from sales team that can be used to analyze and refer different leads to different sales persons. So, the next challenge here is to make system capable of extracting information without considering change management process in place. Interaction outside the organization As we have already discussed, social networks outside the banking CRM system may contain huge data but not all data may be useful to banks. So, the first challenge here is how to segregate and extract useful data from non useful data. Banking CRM should be intelligent enough to do this. Even if banking CRM system is capable of doing the above task it would not be useful without a good analytical engine which can perform analytics as required by the bank. So, the second challenge is to have a good analytical engine. Also, when we talk about Web 2.0 and social networks, we emphasize on the user experience aspect. A good analytical result without a good

presentation may not be useful to bank users. Therefore, the third challenge is to optimize the use of Web 2.0 and present the analytical results in such a way that increase bank users productivity. Suggestions As we know the biggest challenge in realizing the value from social CRM is change management, it is suggested that there should be a change management strategy before implementing social CRM. Change agents (among sales team) should be recognized and motivated. There may be a need to involve human resource department of bank to outline a new incentive plan. All this should start as soon as bank decides to put social CRM as a part of its banking CRM solution. Social CRM vendor should treat the bank as a partner and should participate in the change management process even before implementation of the solution. As we discussed, change management is a time consuming process, social CRM vendor should take this point in to consideration while developing solution. Minimum information may be collected even without change management : How many visits sales person had to make to close a particular deal? Did communication with the client go smooth? Any other product asked by the client which is not in your bucket? Social CRM vendor should take the banks processes in to consideration before developing Business Intelligence (BI) part of social CRM. Social CRM may require different kind of information in different geographies to analyze and suggest leads to other users. Social CRM vendors should make the solution as flexible as possible for parameterization. When we talk about social CRM interacting with the outside world, two points are very important while developing such social CRM for banks. One is segregation of useful and non useful data and

second is security during data transfer. A close relationship with the social networks may help social CRM vendor to develop specific APIs to extract only the useful data. Also, it may help in increasing the security of data during data transfer. As we discussed the extracted data will be useful only if solution can use it intelligently. Now, those vendors who are yet to build or incorporate analytics in their CRM solution have certain advantages and certain disadvantages over those vendors who already have analytics in their solution. Advantage for a new entrant in this area is that Business Intelligence(BI) now may be built considering social CRM part and disadvantage may be a lack of experience in this area. Here, the suggestion to social CRM vendor is to start developing BI as soon as possible if the vendor is new entrant in BI area. For an experienced vendor in BI, the suggestion is to revisit their BI design with their experienced talent pool and try to accommodate social CRM part from BI angle in to their solution. Now, with regards to optimizing the use of Web 2.0, a close relationship with social networks will again help vendors here. References: http://www.mckinseyquarterly.com/Information_ Technology/Management/Building_the_Web_20 _Enterprise_McKinsey_Global_Survey_2174?pag enum=2 http://blogs.oracle.com/socialcrm/2008/07/why_ sales_reps_are_social.html http://www.itbusinessedge.com/blogs/tve/?p=34 4 http://www.networkworld.com/community/nod e/21757 http://www.itworld.com/crm/60272/socialnetworking-roi-pricing-among-09-crm-trends http://blogs.zdnet.com/projectfailures/?p=1073 http://blogs.zdnet.com/SAAS/?p=411

Author Sachin Longani

Associate Consultant-Finacle Infosys Technologies Ltd.

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